Building Vendor Capability Metrics

A process capability model was developed for the vendor management department of an organization. The key issue identified was having no visibility on vendor performances and no way to compare their performances (as all vendors used their own capability metrics). The team used to do a monthly and quarterly review but it was more with a lag of at least a month. The vendor management team wanted a more real time monitoring of the vendor performance and also be able to compare them. A comprehensive study was conducted on all vendor processes and a robust model was built where Sigma Levels were calculated for all vendors on a weekly basis. This ensured quicker monitoring and a suitable method to compare their performance. This project was able to streamline the vendor management department and resulted in savings of INR 23 lacs by removing the low performing vendors.